Case No. EWHC-1798-(IPEC)

1974 – 1983102.There appears to be no dispute that the early companies (up until 1980, and to the extent relevant during the 1980-1983 hiatus) carried on a trade by reference to the name ‘the Rubettes’. The members of the band were responsible for performing but the evidence was consistent that it was the company that ran the business of the band, paying the performers a wage and dealing with all the business aspects of the band. All three of those who had been involved at the time and who gave evidence agreed that none of them had been interested in the business and administrative aspects of the band. It appears to be common ground on the pleadings that the 1976 Company carried on the business and that all income was paid to it and not to individuals.103.During that early period (and indeed throughout), there is no evidence of any partnership coming into existence. None of the parties relies on any such partnership and the Defendants deny that one existed.104.The Defendants’ case is that, in addition to goodwill accruing to the corporate vehicles responsible for the trading activities of the band, goodwill also accrued concurrently to each of the performers and that each of them traded in their individual musical skills as members of the band thereby accruing goodwill.105.There was only limited evidence of the basis on which the band members performed.106.While it was suggested that, at least in the early days, the band members had all had contracts of employment with the relevant corporate entities, none of those contracts was produced. There is no evidence of any of the individual performers at any stage carrying on a business as a performer with the Rubettes which was separate from the trade carried on by the relevant corporate entities. There is no suggestion that the 1976 Company (or AWEL) was acting as agent for any of the musicians involved.107.I accept Mr Smith’s submissions that goodwill is generated by trade and that, absent any agreement to the contrary, the default position of a band of musicians trading together as a band is that of a partnership at will, with the goodwill being owned by the partnership rather than the individuals. I also accept his submission that where an incorporated body is carrying on trade under a band’s name, that company will own goodwill established by that trade. Individual musicians may also accrue goodwill through their performances with a band but this will depend on the nature of their trading activities and will be fact sensitive.108.Absent any substantive submissions as to: (i) the circumstances in which a musician who is performing in a band which is trading through an incorporated body is to be treated as an independent contractor capable of accruing goodwill in the trading name used by the band; or (ii) any evidence that this was in fact the situation during the period from 1974 – 1983, I find that goodwill in ‘the Rubettes’ resided in the 1976 Company and that none of the individual musicians who performed under the name ‘the Rubettes’ at that time accrued any concurrent or joint goodwill.109.Given my finding that none of the individual musicians who performed with the Rubettes before 1983 accrued any goodwill in ‘the Rubettes’ in their own right, the effectiveness of the 1994 Agreements is not determinative of the ultimate outcome of this dispute as the goodwill owned by the 1976 Company is either: owned by AWEL as a result of the 1994 Agreements; or was never validly transferred from the 1976 Company and has defaulted to the Crown under section 654 of the Companies Act. In either event, neither Mr Clarke nor Mr Richardson, as former shareholders in a now dissolved company, has any interest in it. Nevertheless, given that I heard evidence and argument on the 1994 Agreements, I set out my conclusions on the validity and effect of those agreements briefly below.The 1994 Agreements110.By 1994, the 1976 Company owed money to its accountants. The Claimants have pleaded that each of those who had an interest in the 1976 Company agreed to assign any rights they had in that company (including any rights to goodwill) to AWEL in return for Mr Williams’ willingness to pay the debts of the 1976 Company. Mr Richardson and Mr Williams signed agreements purporting to transfer their interests in the 1976 Company to AWEL. Mr Clarke did not.111.Mr Colbey submitted that while Mr Clarke may have indicated orally a tentative willingness to assign his interests in the 1976 Company to AWEL, he then sought advice from a third party and declined to sign any documents or to reach a formal agreement.112.Mr Colbey further submits that Mr Richardson was materially mislead into signing an agreement in 1994 and that the agreement he signed should be set aside.113.In essence, the Defendants’ case on the 1994 Agreements is that:•no legal liability for the debts of the 1976 Company fell on the individual band members;•Mr Clarke and Mr Richardson were wholly indifferent as to whether those debts were paid;•the quantum of debt involved has not been proven and seems to be considerably less than suggested by Mr Williams in his evidence;•there is no evidence that any debt was paid by Mr Williams;•there was therefore no meaningful consideration for any contract (whether oral or written); and•Mr Richardson had not understood that the agreement he had signed would, if valid, deprive him of any right to use the name ‘the Rubettes’ in future without the consent of AWEL, but had been told only that the agreement was to assist in the administration of the 1976 Company and was merely ‘lawyers’ jargon’.114.As a consequence, Mr Richardson and Mr Clarke are said to retain not only their own separately generated goodwill as independent traders (as discussed above), but also a share in any goodwill owned by the 1976 Company.115.Having considered the submissions of Mr Colbey, I do not accept that the written agreement signed by Mr Richardson should be set aside. While Mr Richardson now says that he was misled, there has been no pleading, citation of authority or submission by counsel sufficient to allow me to reach a conclusion that his decision to sign was so affected by any misrepresentation that it should be set aside. In the absence of any substantive argument from Mr Colbey as to the legal implications of the evidence, I do not consider it sufficient to justify setting the agreement aside.116.Mr Colbey also submitted that there had been a failure of consideration as the five pence consideration referred to in the agreement was never paid. I do not accept that submission.117.While the documentary record is patchy, it is not disputed that money was owed by the 1976 Company to its accountants (although the amount is contested). The evidence (and not only that of Mr Williams) shows that the accountants had been chasing the band members to pay the outstanding amounts. Mr Clarke’s oral evidence was clear that there were outstanding debts and that the accountants were seeking payment from him and others.118.The evidence does not establish how serious the threats were, nor how seriously they were taken by the various band members – although Mr Williams suggests that there was some level of concern. It is unclear what level of responsibility each individual felt he had. There is no documentary record of payment having been made, nor of the amount paid by Mr Williams.119.Given the detailed documentary evidence provided by Mr Williams on other aspects of the case, the absence of evidence of payment (or as to amount sought) is a little surprising. However, in the light of the time that has passed since 1994 and given that Mr Clarke agreed that demands had been made by the accountants and that they stopped once Mr Williams had taken responsibility for the debt, I consider it more likely than not that some payment was made and that this settled the position vis-à-vis the accountants.120.Mr Colbey asserted that the payment of the accountants was not meaningful consideration. I do not accept that submission. Mr Colbey appeared to accept that if the five pence consideration recorded in the written agreement had been paid that would have been sufficiently meaningful.121.In all the circumstances, I consider that the settlement of the accountants’ outstanding claims for unpaid fees as a result of which their previous demands came to an end and the band members were relieved from any further pressure was of significant value. Removing the risk of potential claims against them (or their wives owing to their involvement in the 1976 Company), even if those claims might ultimately have failed, was in my view sufficiently meaningful consideration for a contract to be concluded.122.Mr Colbey further relied on the fact that Mr Clarke did not sign the written document presented to him by Mr Williams as indicating that no formal agreement had been concluded. Mr Colbey accepted that an oral agreement would be binding, as long as an agreement had in fact been reached.123.Mr Clarke’s evidence was that he had discussed the issues with Mr Williams but had reached no final agreement. He had then discussed the matter with a third party and had decided not to sign any written document. Mr Clarke did not give evidence that he had told Mr Williams that he needed to get advice, or to consider his proposal further. Mr Clarke’s oral evidence was only that the discussion with Mr Williams, and Mr Williams’ understanding of that discussion, did not mean that Mr Clarke had in fact agreed to Mr Williams’ proposal. Mr Clarke explained orally that Mr Williams’ actions following their discussions indicated only that different people may have different views of the outcome of a discussion.124.Having reviewed the rather sparse evidence about the 1994 Agreement, including the evidence of Mr Kanaar that a meeting between Mr Clarke and Mr Williams took place to discuss the issue, and the fact that Mr Williams took action to satisfy the accountants’ demands after his discussions with the other parties, I conclude that it is more likely than not that an oral agreement was reached between Mr Clarke and Mr Williams which provided that Mr Williams would pay the outstanding debts so as to satisfy the accountants and would receive in return Mr Clarke’s interest in the 1976 Company. Mr Clarke’s subsequent decision, for whatever reason, not to sign the document recording that agreement does not affect the substance of the agreement between him and Mr Williams.125.I conclude, therefore, that both Mr Richardson and Mr Clarke reached an agreement with Mr Williams. If those agreements were to have the effect of transferring goodwill owned by the 1976 Company to AWEL, AWEL would be the owner of all the pre-1983 goodwill in ‘the Rubettes’, given my conclusion above that it was only the 1976 Company (and its predecessor) which accrued goodwill in ‘the Rubettes’ before 1983.126.However, I should record that even if I were to accept that: (i) Mr Clarke did not agree to transfer his interests in the 1976 Company to AWEL; and (ii) that the agreement signed by Mr Richardson should be set aside, it would not follow that Mr Clarke or Mr Richardson would have retained any interest in goodwill owned by the 1976 Company.127.Counsel did not address the substance or effect of the agreements or the underlying property rights in any detail. The brief written document purports to transfer “my share interest in all and any properties, works or interests of which I am a part